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Asset or Collateral Backing
Collateral backing can increase a bond issuer's credit quality.
- Seniority ranking affect credit. In general, secured debt takes priority over unsecured debt if the issuer goes bankrupt. Within unsecured debt, senior debt ranks ahead of subordinated debt. Debentures can be either secured or unsecured.
- Types of collateral backing include collateral trust bonds, equipment trust certificates, mortgage-backed securities, and covered bonds.
An unsecured bond is not secured by collateral.
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Subject 2. Bond Indenturevereign government bonds: general taxing authority of the issuer, project cash flows, and special taxes Corporate bonds: the issuer's operating cash flows Securitized bonds: cash flows from the underlying financial assets
<span>Asset or Collateral Backing
Collateral backing can increase a bond issuer's credit quality.
Seniority ranking affect credit. In general, secured debt takes priority over unsecured debt if the issuer goes bankrupt. Within unsecured debt, senior debt ranks ahead of subordinated debt. Debentures can be either secured or unsecured. Types of collateral backing include collateral trust bonds, equipment trust certificates, mortgage-backed securities, and covered bonds.
An unsecured bond is not secured by collateral.
Covered bonds are debts issued by banks that are fully collateralized by residential or commercial mortgage loans or by loans to public sector institutions.
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